Friday, February 7, 2020

The Morning Call--QE is all that you need to know

The Morning Call


The Market

And the beat goes on.  The Averages (29379, 3345) continued their powerful rally, ending above their former all-time highs (29373/3337).  A close above that level today  will reset their very short term uptrends.  Money flows remain very strong.  And, of course, there is the indices’ underlying long term technical strength.  

The only bothersome thing is the pin action in the VIX.  While it did finish slightly below its 200 DMA (now support; if it remains there through the close next Tuesday, it will revert to resistance), it remains elevated in what has been an explosive Market (suggesting that investors are more risk averse than is obvious in stock prices).

Nonetheless, equity prices are indicating that the ‘improving economic growth rate’ scenario appears squarely back on the table.  However, GLD and TLT are lending only weak support to that notion.  The dollar has been strengthening lately.  Indeed, it ended above its 200 DMA for a second day (now resistance; if it remains there through the close on Monday, it will revert to support).  If this challenge is successful, then the technical position of UUP will improve as well as the message of an improving economy. 

            Thursday in the charts.

            This week in review.

            A new round of bubble talk.

            The divergence of stocks and bonds.



Yesterday’s stats were mixed.  Weekly jobless claims fell more than estimated, but Q4 nonfarm productivity fell short of forecasts.

            Bottom line. If you ignore ( 1) the news flow on the coronavirus, (2) the Market ignoring the news flow on the coronavirus, (3) economic stats which are OK but are by no means pointing at economic ‘lift off’ and just focus on the continuing robust/irresponsible  global fiscal and monetary policies, then you have been paid handsomely.  Be joyful.  That will continue until it doesn’t.  But consider owning some cash.

            Measuring the changes in US/China trade, pre-coronavirus.

            The latest from Ed Yardini.

            Update on valuation.

                The State of the Market.

                JP Morgan adjusts portfolio weightings.

    News on Stocks in Our Portfolios
C.H. Robinson Worldwide (NASDAQ:CHRW) declares $0.51/share quarterly dividend, in line with previous.


   This Week’s Data


            Weekly jobless claims fell 14,000 versus estimates of a decline 1,000.

            Q4 nonfarm productivity rose 1.4% versus forecasts of up 1.6%; unit labor costs increased 1.4%, in line.

            January nonfarm payrolls increased by 78,000 jobs versus projections of +27,000 jobs.


            December Japanese YoY household spending fell 4.8% versus expectations of -1.7%; cash earnings were 0% versus +0.5%.

            The December German trade balance was +E15.2 billion versus consensus of E14 billion; December industrial production fell 3.5% versus -0.2%.


            Iraq on the brink of an energy crisis.

            How Japan has coped with Japanification.

What I am reading today

            Why so many people claim social security at age 62.

            Another example of your tax money at work.

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